Correlation Between McDonalds and Repay Holdings

Can any of the company-specific risk be diversified away by investing in both McDonalds and Repay Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining McDonalds and Repay Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McDonalds and Repay Holdings Corp, you can compare the effects of market volatilities on McDonalds and Repay Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in McDonalds with a short position of Repay Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of McDonalds and Repay Holdings.

Diversification Opportunities for McDonalds and Repay Holdings

-0.54

Correlation Coefficient

McDonalds  Repay Holdings

Excellent diversification

The 3 months correlation between McDonalds and Repay is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding McDonalds and Repay Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repay Holdings Corp and McDonalds is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on McDonalds are associated (or correlated) with Repay Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repay Holdings Corp has no effect on the direction of McDonalds i.e., McDonalds and Repay Holdings go up and down completely randomly.

Pair Corralation between McDonalds and Repay Holdings

Considering the 90-day investment horizon McDonalds is expected to under-perform the Repay Holdings. But the stock apears to be less risky and, when comparing its historical volatility, McDonalds is 3.33 times less risky than Repay Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Repay Holdings Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Repay Holdings Corp on May 7, 2025 and sell it today you would earn a total of  113.00  from holding Repay Holdings Corp or generate 29.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

McDonalds  vs.  Repay Holdings Corp

McDonalds

Risk-Adjusted Performance

Very Weak

Over the last 90 days McDonalds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, McDonalds is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Repay Holdings Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Repay Holdings Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Repay Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with McDonalds and Repay Holdings

The main advantage of trading using opposite McDonalds and Repay Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McDonalds position performs unexpectedly, Repay Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Repay Holdings will offset losses from the drop in Repay Holdings' long position.

The idea behind McDonalds and Repay Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.